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R3: REQUIRED RETAIL READING

January 6, 2009

Here’s an overview of which companies have set a precedent in pre-announcing results in advance of the annual ICR conference, which takes place next week in So Cal. We’ll be out with a Black Book and conf call on Friday discussing key ‘Predictable Unpredictables’ for ’10, which should be good ammo for interviewing management’s at the event.

TODAY’S CALL OUT

In light of the ICR Conference next week, we looked back over the last 4 years to see which companies have a history of pre-announcing either before or at the conference. Keep these companies on your radar as there will be a lot of action around the conference.  Below is a table with ICR participants that have a preannounced positively in green and negatively in red. Also it should be noted that WRC unofficially updated guidance during their presentation last year (see our post on 1/15/09 titled “WRC: Got Transparency?”).  Also look out for SKX which preannounced 2 of the last 4 Mondays before the conference. We’re digging into the next step of this, which clearly is to drill down who will be on this year’s list. We’ve got some initial thoughts. Let us know if you care to discuss.

R3: ICR Pre-Announcement Season Roadmap - 1 

EVENT REMINDER

We are hosting a conference call on Friday,  January 8th  at 11AM (EST) to discuss our Top 10 Retail Predictable Unpredictables in 2010.  Simply put, these are 10 ideas that we assess at better than 60% chance of happening, but today's Wizards of Wall Street either: A) do not acknowledge that such ideas exist, OR B) see them as so unlikely, they do not bake them into their investment process.  Please contact or reply to this email to request dial-in information.

LEVINE’S LOW DOWN 

  • Both Saks and Bergdorfs are advertising post holiday clearance sales at 60% off. However, upon shopping the actual stores there is some merchandise being sold at even greater discounts. Given the backlash last year from the designer community, we suspect the stealth clearance is an effort to appease the vendor community. Second markdowns are still expected to take place later this week or early next week.
  • Meteorologists are suggesting that the recent cold wave that has hovered across most of the country (and is likely to continue) is shaping up to be like the “great winters” of the 60’s and 70’s. After a cold spell early in the Fall and then a warm stretch that followed, the unseasonably cold and consistent cold/snow combination is likely to leave inventory of outerwear and boots in a barren state. Of course, sales of early Spring and transitional apparel may also be put on hold…
  • With CES about to begin, the hype surrounding 3D television is reaching new heights. While the TV technology is likely to be costly and slow to hit the market, the industry may benefit from a major network’s effort to embrace the technology. ESPN announced it is launching ESPN 3D. The network will broadcast 85 live sporting events in 3D in 2010, including the Mexico-South Africa World Cup match in June. An additional 3D network is also expected to be created in a collaboration between Sony, Imax, and Discovery.

MORNING NEWS 

Disney Ups Retail Ante - Disney is creating a coast-to-coast retail sequel stretching from Southern California to Times Square. The Burbank, Calif.-based company is taking an interactive theme park-style approach to revamping its retail profile, and this year will open 20 doors featuring a new store design. Although details are under wraps, the tech-heavy retail concept will have elements reminiscent of Disney’s original Anaheim, Calif., theme park, and is designed as an interactive experience to lure young fans. About 340 stores, a combination of existing locations and new leases, will be launched in the next five years. An undisclosed Southern California space will be the first to bow, and renovations will begin soon on an estimated 25,000-square-foot space at 1540 Broadway, between 45th and 46th Streets, in Times Square. Disney’s first Times Square store closed in 2000. The new concept will feature an assortment of Disney products; interactive displays for children using Disney characters and themes (a “magic mirror” is one such element); theme park-style attractions like a “princess castle” in the store, and a children’s theater with customized viewing material, such as movie clips from Disney’s recent releases.  <wwd.com>

Kohl's Enlarges N.Y. Design Office - Kohl’s Corp., intent on accelerating its private and exclusive brand strategy, is relocating and expanding its New York design office. The new location, at 1400 Broadway, is more than twice the size of Kohl’s existing design office at 1359 Broadway. The retailer plans to begin operating at 1400 Broadway in June. “We continue to differentiate Kohl’s through our exclusive partnerships and remain committed to bringing world-class brands to customers nationwide,” said Kevin Mansell, chairman, president and chief executive officer. “Having a New York presence has been instrumental in growing our exclusive and private brand strategy, which accounted for 45 percent of sales through the third quarter of this year, up over 2 percent compared with last year. The new location allows us to manage our existing brands and support anticipated growth as we continue to focus on growing market share.”  <wwd.com>

Future Group: Value Retail Unit May Consider IPO - India's Future Group may look at options including an initial public offering if its discount store business needs to raise funds, the chief executive of its retail operations said Wednesday. "An IPO is a possibility," Rakesh Biyani told Dow Jones Newswires. "But there are no such plans now." Future Group operates Pantaloon Retail (India) Ltd., the country's largest listed retailer by market capitalization and ... <wsj.com>

Report: Adidas' Reebok Turnaround on Track - Adidas AG may reach a "turnaround" for its Reebok brand as margins rise, Handelsblatt, the German business newspaper, reported, citing an interview with Reebok's head Uli Becker. New products such as its EasyTone toning collection are expected to improve profitability in the U.S. "Provided things continue like this we have reached the turnaround," Becker told the German newspaper in an interview. Becker didn't provide further details, according to Handelsblatt.   <sportsonesource.com>

Belk Bolsters E-Commerce Team - The Charlotte, N.C.-based department store chain said Tuesday that Jon Pollack, executive vice president of sales promotion and marketing, has been given additional responsibility for Belk’s e-commerce business. In another move, Ivy Chin, former vice president of strategic and multimedia operations for the home shopping network QVC Inc., has joined the company as senior vice president of e-commerce, reporting to Pollack. The promotion of Pollack also led to some changes within the merchandising area. David Neri, executive vice president and general merchandise manager of shoes and accessories, has added oversight for cosmetics, which reported to Pollack, and fine jewelry, which had been overseen by Kathy Bufano, president of merchandising and marketing. Pollack and Neri will continue to report to Bufano.  <wwd.com>

M&S Sales Disappoint; Shares Drop Most Since October - Marks & Spencer Group Plc, the U.K.’s largest clothing retailer, reported a gain in holiday sales that some analysts said missed estimates and predicted that business conditions will “remain challenging” over the coming year. Marks fell as much as 5.4 percent in London trading, the most since October, after saying revenue at stores open at least a year rose 0.8 percent in the fiscal third quarter. The sales missed estimates, according to Morgan Stanley and Credit Suisse analysts, although Finance Director Ian Dyson said growth would have been 1 percent higher had the figures included the first day of the post-holiday clearance, as they did last year.  <bloomberg.com>

Saks Hit With Unfair Labor Charge - A department store union filed an unfair labor practice charge against Saks Inc., following a move by the upscale retailer to eliminate 115 jobs in the cosmetics department of its Fifth Avenue store in New York at the end of this month. <wsj.com>

Ski Market Files for Bankruptcy Protection - Ski Market, a retailer of outdoor products and winter sports gear with headquarters in Wellesley, MA, filed for Chapter 11 bankruptcy protection. In court documents, Ski Market's president and chief executive, Andrew Ferguson, said the company had been operating at a loss for several years and the economic downturn and its "negative impact on consumer spending during 2008 and 2009 exacerbated Ski Market's financial problems." Ski Market employs 170 full- and part-time employees in seven retail stores. Its website lists 16 locations, most of which have been shut down. According to its website, only 7 stores remain in operation. <sportsonesource.com>

Crocs General Counsel Resigns  - Erik Rebich resigned as vice president, general counsel and secretary of Crocs, Inc., effective Dec. 31. Effective Jan. 1, Daniel P. Hart, the company’s current executive vice president, administration and corporate development was appointed as executive vice president, chief legal and administrative officer and secretary of the company. <sportsonesource.com>

Wave of Store Closings Seen as Firms Reshape - As Macy’s Inc. on Tuesday revealed it’s shutting down five units over the next two months, there’s been growing speculation other chains will soon chime in with their own announcements of closures after digesting 2009 results and determining which units performed and which didn’t. The first quarter is usually when retailers streamline their fleets. However, the recession has underscored the nation’s overstored and overinventoried state. It’s testing retailers’ management skills, pushing them to rethink the future, strive for greater productivity and to make painful cuts across the board. Aside from closing stores, retailers have intensified negotiations with landlords over rent concessions, mitigating some downsizing. Last year, there were sharp reductions in head counts and merchandise orders, but not the tsunami of store closings that was expected.  <wwd.com>

Consumer bankruptcies jump 32 percent in 2009 - Consumer bankruptcies in the United States soared 32 percent in 2009 from the year before, the American Bankruptcy Institute said Tuesday. The total filings -- 1.4 million -- is the highest since 2005, the same year that Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act. "A combination of economic stress, including high debt loads, rising unemployment and unsustainable mortgage burdens, left many consumers with little choice but to seek the financial relief of bankruptcy, ABI Executive Director Samuel J. Gerdano said in a statement. "As these strains continue for U.S. households, we expect that consumer filings will rise higher in 2010." Indeed, in December consumer bankruptcy filings rose 33 percent to 113,274 from 84,926 during the same month in 2008. <ajc.com>

Asian Consumers Most Upbeat, American Sentiment Dips - Consumer confidence is strongest in emerging Asia, Brazil and Australia, but weakened slightly in the United States in the fourth quarter as Americans worried about job security, a survey showed on Wednesday. Consumer sentiment was highest in Indonesia, followed by India and Brazil, and was weakest in Japan and South Korea, according to the survey conducted by the New York-based Nielsen Company a month ago. Globally, the Nielsen Global Consumer Confidence Index averaged a reading of 87 points in the fourth quarter, little changed from the third quarter but 5 points higher than the second quarter. The U.S. reading dipped to 82 in the fourth quarter from 84 three months earlier, reflecting concern about rising unemployment and ranking U.S. confidence at 18th among the 29 markets surveyed worldwide. <abcnews.go.com>

China To End Subsidies On 'Famous Brands' Manufacturing - China has agreed to eliminate dozens of subsidies supporting the export of so-called "famous brands" in a move that U.S. Trade Representative (USTR) Ron Kirk says will  "level the playing field" for U.S. manufacturers of a wide range of products. The subsidies were the subject of a World Trade Organization (WTO) dispute initiated by the U.S. government in the face of what it believed were illegal subsidies under WTO rules. Kirk said the agreement is designed to resolve U.S. concerns raised in a WTO case the United States initiated in December 2008. He said the United States had challenged a Chinese industrial policy that generated a "vast number" of central, provisional and local government subsidies promoting increased worldwide recognition  and sales of famous brands for merchandise. <textileworld.com>

Paid search clicks and costs go up, search marketing firm says - Online shoppers clicked more often on paid search ads during the holiday season than a year earlier, and retailers paid more for those clicks, says search marketing firm NetElixir, based on a study of 32 retailer clients. Total clicks were up 11.0% from Nov. 1-Dec. 26 versus a year earlier, and cost per click increased 4.58%, says NetElixir. The study also found there were 10-12% more advertisers per keyword this year. The click-through rate also increased, to 9.8%, but consumers clicked more often before making a purchase, 6-8% more often on average, the search marketing firm says. The increase in total clicks was the big surprise, as NetElixir had projected only a 3-4% year-over-year increase in clicks for the holiday season, following a slow first half of 2009. “The jump in clicks bodes well for our industry,” says NetElixir CEO Udayan Bose.  <internetretailer.com>

Shop price inflation rises in December - Shop inflation rose sharply in December to 2.2%, from 0.2% in November, according to the BRC Nielsen Shop Price Index. The passing of the first anniversary of the 15% VAT rate, effectively cutting its downward effect on inflation, was blamed for much of the rise. Non-food inflation rose to 1.4% from -1.2% in November, making the month the first for non-food inflation since December 2008. BRC director general Stephen Robertson said:  “With December being the first and only month where the 15% VAT rate was the same as a year earlier, a shop price inflation rise was inevitable.” The BRC said the return to a 17.5% VAT rate on January 1 would mean further upward pressure on inflation as comparisons are made against the lower rate of the corresponding period in 2009. <drapersonline.com>

IRCE 2010 announces largest e-retailing conference agenda ever - The Internet Retailer Conference and Exhibition 2010 today announced the largest e-retailing conference agenda in the history of online selling. 91 conference sessions over four days—June 8 to 11 at Chicago’s McCormick Place West—will address topics of crucial interest as Internet retailing becomes more important than ever in the economic recovery. IRCE’s 175 speakers will address every major e-retailing strategy and practice and will weave their presentations into the theme of this year's agenda: "Time to Reboot: Recharging Your E-Commerce Business." Registration information for the conference is available at www.irce.com. IRCE 2010 is also pleased to announce that the 2010 Keynote Speaker will be Imran Jooma, senior vice president and general manager of e-commerce, Sears Holdings Corp., the No. 2 online mass merchant and No. 7 online merchant overall.  <internetretailer.com>